Managing Cost-of-Living Differences for Pay in a Remote World | HR Executive Online

Workforce Trends

As the number of remote jobs increases, many employers are increasingly able to recruit skilled candidates from anywhere. Not only does this enable organizations to gain access to a deeper pool of talent, but it can also help them to attract and employ diverse candidates. While these are a few of the positives that have emerged from the pandemic’s many negatives, it has also forced organizations to rethink pay variation based on geography. As pointed out in this short article, fundamental questions have surfaced: Do salaries need to be adjusted for cost-of-living differences? Should someone living in Iowa, for example, earn the same salary for performing the same remote job as someone living in New York? And while some companies pay a globally universal salary, others apply a ‘cost of living’ differentiator– a coefficient determined by the cost of living in a particular place. This factor is applied to the base salary for a position, usually determined by a range of other factors such as experience, team, position, and education. Given this approach, by default, you end up with different pay for the same job. Although this debate isn’t new, it will now become a more significant part of the conversation due to remote work at scale. Organizations will need to determine how they will approach this topic, factoring in several variables such as role criticality, supply and demand of skills required, and their overall talent philosophy, to name a few.

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